President Obama greets workers of Allentown Metal Works during a tour of the factory in Allentown, Pa., on Dec. 4. An analyst says workers at large companies who get insurance from their employer probably won't see much change under the health care bill.

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Americans would feel varying effects from health bill

By John Fritze, USA TODAY

WASHINGTON  The 10-year, $871 billion health care bill approved by the Senate last week would change the way millions of Americans access health insurance — for some more than others.

Policies offered through large employers would be affected differently than those at small firms. Health care would change for the self-employed in ways that wouldn't affect seniors on Medicare.

Explaining how the legislation would affect people who already have coverage will be key as Congress begins the task next month of merging the Senate bill with a separate, $1.1 trillion measure approved by the House.

"Entrepreneurs will benefit. Patients and survivors of diseases will benefit. Americans of different backgrounds and ethnicities will benefit," Senate Majority Leader Harry Reid of Nevada said last week.

Republicans have unanimously opposed the proposals and Senate Minority Leader Mitch McConnell of Kentucky said the party will continue to do so. "The American people are still going to have another month or so … to weigh in and express their concerns about this package."

Both the House and Senate bills would expand coverage to millions of uninsured Americans. Both bills would require people to have a policy and would provide subsidies to help low- and-moderate-income families afford premiums.

Other changes are in store for people who have coverage. Here are some of the largest groups that would be affected.

Medicare beneficiaries

The 44.8 million people receiving insurance through Medicare made seniors a powerful force in the health care debate and won key concessions that would change how the program works.

The House bill would eliminate a prescription drug benefit gap by 2019. In 2009, the gap required seniors to pay for drugs after they received $2,700 in coverage and until their expenses hit $6,154. The Senate legislation would reduce the gap by $500 in 2010. Both bills would eliminate co-payments for preventive care.

"This bill is good for Medicare and Medicare enrollees," said John Rother, policy director for the AARP, which has supported the legislation.

The Senate bill calls for $483 billion in cuts to Medicare, Medicaid and other programs over 10 years. A Department of Health and Human Services report this month said the cuts could cause fewer doctors to treat Medicare patients.

"I'm concerned about what's coming," said Doug Rowe, 69, from Marquette, Mich., who is enrolled in Medicare Advantage. The program, which lets private insurers offer Medicare benefits at rates partially subsidized by the government, is due for cuts. "If Medicare reduces its benefits, then I'll end up having to pay the difference," he said.

Employees at small businesses

Because they have less leverage with insurers — as well as smaller risk pools — small businesses face high hurdles to offering coverage. How the bills would affect employees at small firms depends largely on what individual business owners decide to do.

Both proposals would let small companies choose to buy insurance through "exchanges," online marketplaces in which employees could pick from a range of private plans. That would let businesses increase risk pools and reduce administrative overhead by buying coverage alongside other small companies, said the Urban Institute's Linda Blumberg.

"Small employers are just not efficient purchasers of health insurance coverage," Blumberg said. "What these bills do is they really try to make progress."

In the House bill, businesses with 25 or fewer employees could buy into the exchange in the first year. Larger firms would be allowed in over time. In the Senate bill, companies with up to 100 workers would be eligible.

Small companies that offer insurance could choose to continue their current plans.

Premiums for small business employees could go up by 1% or down by as much as 2% under the Senate bill, according to the Congressional Budget Office.

John Ligon, a policy analyst with the conservative Heritage Foundation, doubts the bills would encourage small companies that don't provide coverage to start offering it. One of the biggest problems for small businesses, he said, is uncertainty over the cost of premiums.

"There's no guarantee that the costs will be lower," Ligon said. "One of the main fears business owners have is whether they're going to have to retract coverage a year or two later."

Employees at large companies

Few of the changes proposed in the health care legislation are directed at the 70% of Americans who buy health insurance through a large company. The non-partisan Congressional Budget Office predicts premiums for people in the "large group market" would stay constant or fall by as much as 3% compared with what would happen if a bill is not enacted.

The average PPO plan for a family offered through a large firm cost $13,844 in 2009, according to the Kaiser Family Foundation.

"The average employee is not going to see much of a change at all," said David Kendall at Third Way, a centrist Washington think tank that supports the health care bill. "Reformers have recognized that the 'large groups' are the most stable part of our private health care system."

One benefit for employees at large firms: Buying health insurance could get easier if they lose their job. People who are laid off would be able to buy a policy through health insurance exchanges, where insurers could not deny coverage or increase rates for people with pre-existing conditions.

There are potential pitfalls, too, said Dena Battle of the National Association of Manufacturers. A $6.7 billion tax on insurers as well as a 40% tax on "Cadillac" policies that cost more than $23,000 for a family could result in higher premiums or reduced coverage, she said.

Employees would face a $2,500 annual cap on tax-free savings accounts used for health expenses. The money set aside in the accounts would count toward the $23,000 Cadillac threshold, which Battle predicted would force some companies to stop offering the savings plans altogether.

Self-employed

People who buy health coverage on their own — not through an employer — would face some of the biggest changes under the health care bills.

Like all Americans, independent contractors and the self-employed would be required to have coverage by 2014 or face a penalty.

About one-third of the 22 million self-employed don't have coverage, said Kristie Arslan with the National Association for the Self-Employed.

Some provisions would help: Insurers could no longer deny coverage or increase premiums because of pre-existing medical conditions. Enrollees would be protected from having their coverage dropped if they got sick.

But premiums for some in the "non-group" insurance market would increase 13%, the Congressional Budget Office predicts.

For those eligible to receive subsidies, premiums would fall 59% on average, but subsidies would be available only to individuals earning less than $43,320 a year.

Reid and other Democrats say the higher prices for some would buy more stable coverage because the bills would set minimum standards for policies.

Arslan said some members of her association would rather have the ability to choose fewer perks if it meant paying less.

"Entrepreneurs need lower costs and they need flexibility," said Arslan, whose group opposes the Senate bill. "In this economy, it's all about the bottom line."

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